This past week Canada Mortgage and Housing (CMHC) backtracked on an unpopular policy move they made at the start of the pandemic last year. They tightened underwriting guidelines to limit debt service ratio’s for insured mortgages to 35/42% of GDS/TDS. This is because last year CMHC incorrectly estimated that the pandemic would cause a softening in the housing market. What happened was exactly the opposite. Instead of home values dropping by up to 18-20% they increased by the amount that they thought we were going to lose.
The other two insurers Canada Guranty and Sagen ( previously know as Genworth) who normally follow in lock step with whatever CMHC decides to do decided to keep their policy the same and allow for ratios up to 39/44. So what happened is that they ( Canada Guranty & Sagen) had a rapid increase in market share of the insured mortgage business as the housing market heated up.
So CMHC with their new leader, Romy Bowers decided that they could no longer live by Evan Siddall’s erroneous policy change and thus shrinking market share and changed back to 39/44%. Only time will tell if this will do anything to help them recapture their lost market share.
“We are products of our past, but we don’t have to be prisoners of it.” Rick Warren
Today I am thankful for a storm that passed quickly and left no damage in it’s wake, a expected rainy day that turned out quite nice and fresh strawberries and cream for snack.
I look forward to hearing from you in regard to your mortgage needs.
p.s.s- I should tell you that I am licensed in Nova Scotia, Ontario(M18001555) & in British Columbia(BCFSA #504098).
p.s.s.s You can download my new mortgage app here